First Supplemental Trust Deed

LIMITED LIABILITY PARTNERSHIP C H A N C E


CONFORMED COPY


DATED 1 OCTOBER 2001


YORKSHIRE POWER FINANCE LIMITED


as Issuer


- and -


YORKSHIRE POWER GROUP LIMITED


as Guarantor


- and -


BANKERS TRUSTEE COMPANY LIMITED


as Trustee


FIRST SUPPLEMENTAL TRUST DEED


relating to (pound)200,000,000 7.25 per cent.


Guaranteed Bonds due 2028


CONTENTS


Clause Page


1. Definitions And Interpretation 1


2. Representations And Warranties 2


3. Amendments To The Principal Trust Deed 2


4. Trust Deed 4


5. Conditions Precedent 4


6. Costs, Expenses And Indemnification 5


7. Further Assurance 5


8 Counterparts 5


9. Governing Law And Jurisdiction 5


10. Third Party Rights 6


Schedule 1 CONDITIONS OF THE ORIGINAL BONDS 7


Schedule 2 FORM OF NOTICE TO BONDHOLDERS 25


THIS FIRST SUPPLEMENTAL TRUST DEED is made on 1 October 2000


BETWEEN:


(1) YORKSHIRE POWER FINANCE LIMITED as Issuer ("YPFL" or the "Issuer");


(2) YORKSHIRE POWER GROUP LIMITED as Guarantor (the "Guarantor"); and


(3) BANKERS TRUSTEE COMPANY LIMITED (the "Trustee" which expression where
the context so admits, includes all persons for the time being the
trustee or trustees of this First Supplemental Trust Deed).


WHEREAS:


(A) YPFL has issued the Original Bonds constituted by a trust deed (the
"Principal Trust Deed") dated 4 February 1998 made between the Issuer,
the Guarantor and the Trustee.


(B) The parties hereto agree to enter into this First Supplemental Trust
Deed to make certain amendments to the Conditions as a consequence of
changes in the UK regulatory regime for the electricity sector under
the Utilities Act 2000 (the "Regulatory Changes"), to make certain
amendments to the Principal Trust Deed as a result of the coming into
force of the Trustee Act 2000 and to make various miscellaneous
amendments to the Conditions, pursuant to Condition 16(b) and Clause
19(B)(i) of the Principal Trust Deed.


NOW THIS DEED WITNESSETH and it is hereby agreed and declared as follows:


1. DEFINITIONS AND INTERPRETATION


1.1 Definitions


In this First Supplemental Trust Deed:


"Completion Date" means 1 October 2001 or such other date as the
Trustee may agree by notice to the other parties hereto; and


"IFA" means an independent financial adviser, appointed pursuant to an
engagement letter dated 28 September 2001; and


"Trust Deed" means the Principal Trust Deed as supplemented by this
First Supplemental Trust Deed.


1.2 Principles of interpretation


In this First Supplemental Trust Deed:


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1.2.1 Clauses and Schedules: any reference to a Schedule or a Clause
or sub-clause is, unless otherwise stated, to a schedule
hereto or a clause or sub-clause hereof respectively; and


1.2.2 Principal Trust Deed: save as herein otherwise provided, all
words and expressions defined in the Principal Trust Deed
shall where the context so requires and admits have the same
meaning in this First Supplemental Trust Deed and the
principles of interpretation specified in Clause 1(B) of the
Principal Trust Deed shall where the context so requires and
admits also apply to this First Supplemental Trust Deed.


2. REPRESENTATIONS AND WARRANTIES


The Issuer and the Guarantor represent and warrant to the Trustee as follows:


2.1 The Issuer is duly incorporated under the laws of the Cayman Islands
and the Guarantor is duly incorporated under the laws of England and
each of the Issuer and the Guarantor has full power and capacity to
execute and deliver this First Supplemental Trust Deed and to undertake
and perform the obligations expressed to be assumed by it herein and
has taken all necessary action to approve and authorise the same;


2.2 All authorisations, consents and approvals required by each of the
Issuer and the Guarantor, for or in connection with the execution of
this First Supplemental Trust Deed and the performance by the Issuer
and the Guarantor of the respective obligations expressed to be
undertaken by them herein have been obtained and are in full force and
effect;


2.3 No Event of Default, and no condition, event, or act which, with the
lapse of time and/or the giving of a notice and/or the issuing of any
certificate, would be an Event of Default, has occurred or will occur
on the Completion Date.


3. AMENDMENTS TO THE PRINCIPAL TRUST DEED


The Principal Trust Deed, with effect from the Completion Date, shall be amended as follows:


3.1 Part II of the Second Schedule shall be deleted and replaced by
Schedule 1 hereto;


3.2 The definition of "Cedel" in Clause 1(A) shall be deleted and replaced
with the following text:


"Clearstream, Luxembourg" means Clearstream Banking, societe anonyme,
Luxembourg;";


3.3 The following text shall be inserted after the definition of "Coupons"
in Clause 1(A):


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"Distribution Licence" has the meaning set out in Condition 3;


"Distribution Subsidiary" has the meaning set out in Condition 3;


3.4 The definition of "Euroclear" in Clause 1(A) shall be deleted and
replaced with the following text:


"Euroclear" means Euroclear Bank S.A./N.V., as operator of the
Euroclear System;


3.5 The following text shall be inserted after the definition of
"Liability" in Clause 1(A):


"London Stock Exchange" means the London Stock Exchange plc or any
successor thereto;


3.6 The following text shall be inserted after the definition of "Trust
Corporation" in Clause 1(A):


"UK Listing Authority" means the Financial Services Authority in its
capacity as competent authority under the Financial Services Act 1986;


3.7 The definitions of "PES Licence" and "PES Subsidiary" in Clause 1(A)
shall be deleted in their entirety;


3.8 In Clause 1(B), the following text shall be inserted after sub-clause
(xi):


"(xii) All references in these presents to Securities being "listed" or
"having a listing" shall, in relation to the London Stock Exchange, be
construed to mean that such Securities have been admitted to the
Official List by the UK Listing Authority and to trading on the London
Stock Exchange's market for listed securities and all references in
these presents to "listing" or "listed" shall include references to
"quotation" and "quoted" respectively.


(xiii) All references in these presents to Euroclear and/or
Clearstream, Luxembourg shall be deemed to include references to any
other clearing system as is approved by the Trustee.


3.9 All references to "PES Licence" shall be deleted and replaced by
"Distribution Licence" and all references to "PES Subsidiary" shall be
deleted and replaced by "Distribution Subsidiary";


3.10 All references to "Trustee Act 1925" shall be deleted and replaced by
"Trustee Act 1925 and Trustee Act 2000 (together the "Trustee Acts")";
and


3.11 All references to "Cedel Bank" shall be deleted and replaced by
"Clearstream, Luxembourg".


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3.12 Clause 16(D) shall be deleted and replaced with the following text:


"The Trustee may appoint and pay any person to act as a custodian or
nominee on any terms in relation to such assets of the trust as the
Trustee may determine, including for the purpose of depositing with a
custodian these presents or any document relating thereto and the
Trustee shall not be responsible for any loss, liability, expense,
demand, cost, claim or proceedings incurred by reason of the
misconduct, omission or default on the part of any person appointed by
it hereunder or be bound to supervise the proceedings or acts of any
such person; the Trustee is not obliged to appoint a custodian if the
Trustee invests in securities payable to bearer."


3.13 The following shall be inserted in the second line of Clause 16(S),
after the words "employ and pay an agent":


"on any terms"


3.14 The following shall be inserted as a new clause 16(U):


"Section 1 of the Trustee Act 2000 shall not apply to the duties of the
Trustee in relation to the trusts constituted by these presents. Where
there are any inconsistencies between the Trustee Acts and the
provisions of these presents, the provisions of this Trust Deed shall,
to the extent allowed by law, prevail and, in the case of any such
inconsistency with the Trustee Act 2000, the provisions of these
presents shall constitute a restriction or exclusion for the purposes
of that Act."


3.15 The following shall be inserted as a new Clause 30:


"RIGHTS OF THIRD PARTIES


NO person shall have any right under the Contracts (Rights of Third
Parties Act 1999) to enforce any term of these presents, but this does
not affect any right or remedy of any third party which exists or is
available apart from that Act."


4. TRUST DEED


4.1 With effect from the date of this First Supplemental Trust Deed, the
Principal Trust Deed shall be amended to conform with the amendments
contained herein. Thereafter, without prejudice to any existing rights
and obligations, the Principal Trust Deed as so amended shall continue
in full force and effect. Save as provided herein, the Principal Trust
Deed shall be read and construed in conjunction as one document with
this First Supplemental Trust Deed.


4.2 The Trustee agrees, pursuant to Clause 19(B)(i) of the Principal Trust
Deed and based, in respect of the amendments consequent on the
Regulatory Changes, on expert advice received from the IFA, that the
amendments made by this First Supplemental Trust Deed are not
materially prejudicial to the Holders and Couponholders and concurs
with the amendments.


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5. CONDITIONS PRECEDENT


5.1 Conditions Precedent


5.1.1 This First Supplemental Trust Deed shall only take effect on
the Completion Date upon the delivery to the Trustee of the
following documents in a form satisfactory to the Trustee:


(a) Supplemental Agency Agreement: a duly executed
supplemental agency agreement where each of the
Issuer and the Guarantor agrees to be bound by the
Agency Agreement insofar as it relates to the
Original Bonds;


(b) IFA's Certificate: a certificate dated on or before
the Completion Date from the IFA; and


(c) Notice to Bondholders: the notice to Bondholders
substantially in the form set out in Schedule 2 (the
"Notice to Bondholders").


5.1.2 The Issuer shall procure the publication of the Notice to
Bondholders in accordance with the Trust Deed as soon as
practicable after the Completion Date.


5.2 The Trustee may in its discretion waive the delivery, or the form, of
any of the documents referred to in Clause 5.1.1 of this First Supple-
mental Trust Deed or any part of them.


6. COSTS, EXPENSES AND INDEMNIFICATION


6.1 The Issuer and the Guarantor shall, from time to time on demand of the
Trustee, reimburse the Trustee for all proper costs and expenses
(including legal fees) incurred by it in connection with the
negotiation, preparation and execution or purported execution of this
First Supplemental Trust Deed and the completion of the matters herein
contemplated.


6.2 The Issuer and the Guarantor shall jointly and severally indemnify the
Trustee and every attorney, manager, agent, delegate or other person
properly appointed by it hereunder against any and all losses,
liabilities, costs, claims, actions or demands incurred by it or him or
which may be made against it or him as a result of or in connection
with the execution or purported execution of this First Supplemental
Trust Deed and the amendments hereby effected.


7. FURTHER ASSURANCE


The Issuer and the Guarantor jointly and severally undertake to the
Trustee to execute all such other documents and comply with all such


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other requirements to effect the amendments contemplated hereby and any
other matter incidental thereto as the Trustee may direct in the
interests of the Holders.


8. COUNTERPARTS


This First Supplemental Trust Deed may be executed in counterparts (and
in engrossment, photocopy or facsimile form) and the executed documents
shall, from the date on which all parties hereto have executed a
counterpart hereof, be construed and have effect as though all such
counterparts were one document executed by the parties hereto.


9. GOVERNING LAW AND JURISDICTION


9.1 This First Supplemental Trust Deed is governed by, and shall be
construed in accordance with, the laws of England.


9.2 Clause 28 of the Principal Trust Deed shall apply, mutatis mutandis,
to this First Supplemental Trust Deed as if set out herein in full.


10. THIRD PARTY RIGHTS


A person who is not party to this First Supplemental Trust Deed may not
enforce any terms of this First Supplemental Trust Deed under the
Contracts (Rights of Third Parties) Act 1999, but this does not affect
any right or remedy of any third party which exists or is available
apart from that Act.


IN WITNESS WHEREOF this First Supplemental Trust Deed has been executed as a deed by the parties hereto and is intended to be and is hereby delivered on the day first before written.


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SCHEDULE 1
CONDITIONS OF THE ORIGINAL BONDS


The following is the text of the terms and conditions of the Bonds which (subject to amendment) will be endorsed on each Bond in definitive form:


The (pound)200,000,000 7.25 per cent. Guaranteed Bonds due 2028 (the "Bonds", which expression shall in these Terms and Conditions, unless the context otherwise requires, include any further bonds issued pursuant to Condition 18 and forming a single series with the Bonds) of Yorkshire Power Finance Limited (the "Issuer") are constituted by the trust deed dated 4th February, 1998 (the "Principal Trust Deed"), between the Issuer, Yorkshire Power Group Limited (the "Guarantor") and Bankers Trustee Company Limited (the "Trustee", which expression shall include any successor) as trustee for the Holders of the Bonds ("Bondholders") as supplemented by a first supplemental trust deed dated 1st October, 2001 (the "First Supplemental Trust Deed") made between the Issuer, the Guarantor and the Trustee. The Principal Trust Deed and the First Supplemental Trust Deed are together referred to as the "Trust Deed". The issue of the Bonds was authorised by resolutions of the board of directors of the Issuer passed on 5th January, 1998 and of a committee of the board of directors of the Issuer passed on 22nd January, 1998 and of the board of directors of the Issuer passed on 28th September, 2001 and, inter alia, the giving of the guarantee in respect of the Bonds (which is contained in the Trust Deed) was authorised by resolutions of the board of directors of the Guarantor passed on 2nd December, 1997 and on 28th September, 2001. The statements in these Terms and Conditions include summaries of, and are subject to, the detailed provisions of and definitions in the Trust Deed. The Bonds are also issued with the benefit of an agency agreement dated 4th February, 1998 (the "Principal Agency Agreement") made between the Issuer, the Guarantor, Union Bank of Switzerland as principal paying agent (the "Principal Paying Agent", which expression shall include any successor) and the other paying agent named therein (together with the Principal Paying Agent, the "Paying Agents", which expression shall include any additional or successor paying agents) and the Trustee, as supplemented by a first supplemental agency agreement dated 1st October, 2001 (the "Supplemental Agency Agreement") made between the Issuer, the Guarantor and the Paying Agents (including HSBC Bank plc as principal paying agent, being the successor to Morgan Guaranty Trust Company of New York, London office in that capacity). The Principal Agency Agreement and the Supplemental Agency Agreement are together referred to as the "Agency Agreement". Copies of the Trust Deed and the Agency Agreement are available for inspection during normal business hours by the Bondholders and the holders of the interest coupons appertaining to the Bonds (respectively, the "Couponholders" and the "Coupons") at the registered office for the time being of the Trustee, being at 1st October, 2001 at Winchester House, 1 Great Winchester Street, London EC2N 2DB, and at the specified office of each of the Paying Agents. The Bondholders and the Couponholders are entitled to the benefit of, are bound by, and are deemed to have notice of, all the provisions of the Trust Deed and the Agency Agreement. The Bonds will have talons for further Coupons ("Talons") attached on issue. Any reference herein to Coupons or coupons shall, unless the context otherwise requires, be deemed to include a reference to Talons or talons and the expression "Couponholders" shall, unless the context otherwise requires, include the holders of the Talons.


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1. Form, Denominations and Title


The Bonds are in bearer form, serially numbered, in the denominations
of (pound)1,000, (pound)10,000 and (pound)100,000 each with Coupons and
Talons attached on issue. Title to the Bonds and to the Coupons and
Talons will pass by delivery. Bonds of one denomination cannot be
exchanged for Bonds of another denomination.


The Issuer, the Guarantor, any Paying Agent and the Trustee may (to the
fullest extent permitted by applicable laws) deem and treat the holder
of any Bond and the holder of any Coupon as the absolute owner for all
purposes (whether or not the Bond or Coupon shall be overdue and
notwithstanding any ownership or writing on the Bond or Coupon or any
notice of previous loss or theft of the Bond or Coupon).


2. Status of the Bonds


The Bonds and the Coupons are direct, unconditional and, subject to the
provisions of Condition 3, unsecured obligations of the Issuer and,
subject as aforesaid, rank and will rank pari passu, without any
preference among themselves, with all other outstanding unsecured and
unsubordinated obligations of the Issuer, present and future, but, in
the event of insolvency, only to the extent permitted by the applicable
laws relating to creditors' rights.


3. Negative Pledge


So long as any of the Bonds remains outstanding (as defined in the
Trust Deed) the Issuer and the Guarantor will procure that no Relevant
Indebtedness (as defined below) of the Issuer, the Guarantor, Yorkshire
Electricity Group plc ("YEG") or any Distribution Subsidiary (as
defined below) or of any other person and no guarantee by the Issuer,
the Guarantor, YEG or any Distribution Subsidiary of any Relevant
Indebtedness of any other person will be secured by a mortgage, charge,
lien, pledge or other security interest (each a "Security Interest")
upon, or with respect to, any of the present or future business,
undertaking, assets or revenues (including any uncalled capital) of the
Issuer, the Guarantor, YEG or any Distribution Subsidiary unless the
Issuer and the Guarantor shall, before or at the same time as the
creation of the Security Interest, take any and all action necessary to
ensure that:


(i) all amounts payable by the Issuer under the Bonds, the Coupons
and the Trust Deed, or by the Guarantor under the Guarantee
(as defined below), are secured equally and rateably with the
Relevant Indebtedness or guarantee, as the case may be, by the
Security Interest to the satisfaction of the Trustee; or


(ii) such other Security Interest or guarantee or other arrangement
(whether or not including the giving of a Security Interest)
is provided in respect of all amounts payable by the Issuer
under the Bonds, the Coupons and the Trust Deed, or by the
Guarantor under the Guarantee, either (i) as the Trustee shall
in its absolute discretion deem not materially less beneficial
to the interests of the Bondholders or (ii) as shall be


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approved by an Extraordinary Resolution (as defined in the
Trust Deed) of the Bondholders,


save that the Issuer, the Guarantor, YEG or any Distribution Subsidiary
may create or have outstanding a Security Interest in respect of any of
its Relevant Indebtedness and/or any guarantees given by the Issuer,
the Guarantor, YEG or any Distribution Subsidiary in respect of any
Relevant Indebtedness of any other person (without the obligation to
provide a Security Interest or guarantee or other arrangement in
respect of the Bonds, the Coupons and the Trust Deed as aforesaid)
where such Relevant Indebtedness has an initial maturity falling not
earlier than 4th August, 2028 and is of a maximum aggregate amount
outstanding at any time not exceeding the greater of (pound)200,000,000
and 20 per cent. of the Capital and Reserves (as defined below).


For the purposes of these Terms and Conditions:


(a) "Capital and Reserves" means the aggregate of:


(i) the amount paid up or credited as paid up on the
share capital of the Guarantor; and


(ii) the total of the capital, revaluation and revenue
reserves of the Group, including any share premium
account, capital redemption reserve and credit
balance on the profit and loss account, but excluding
sums set aside for taxation and amounts attributable
to outside shareholders in Subsidiary Undertakings
(as defined below) and deducting any debit balance on
the profit and loss account,


all as shown in the then latest audited consolidated balance
sheet of the Group prepared in accordance with the historical
cost convention (as modified by the revaluation of certain
fixed assets) for the purposes of the Companies Act 1985, but
adjusted as may be necessary in respect of any variation in
the paid up share capital or share premium account of the
Guarantor since the date of that balance sheet and further
adjusted as may be necessary to reflect any change since the
date of that balance sheet in the Subsidiary Undertakings
comprising the Group and/or as the Auditors (as defined in the
Trust Deed) may consider appropriate.


A report by the Auditors as to the amount of the Capital and
Reserves at any given time shall, in the absence of manifest
error, be conclusive and binding on all parties;


(b) "Distribution Licence means the electricity distribution
licence granted under section 6(1)(c) of the Electricity Act
1989, as amended by the Utilities Act 2000, to the
Distribution Subsidiary (as defined below);


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(c) "Distribution Subsidiary" means Yorkshire Electricity
Distribution plc, as holder of the Distribution Licence, or
any other Subsidiary of the Guarantor that holds the
Distribution Licence from time to time;


(d) "Excluded Subsidiary" means any Subsidiary of the Guarantor
(other than a D ...